UK Lockdown 2.0 - Which Businesses Are Staying Open and What Is Different This Time

Summary

• The Lockdown 2.0 will be implemented from 5 November midnight for next four weeks and might get extended if the Covid situation worsens
• This time, nurseries, schools and educational institutes will be allowed to operate.
• Covid safe retail shops can operate through online delivery platforms and takeaways

The second coronavirus lockdown will come into force in England from 5 November midnight till 2 December, which will lead to the closure of non-essential shops, pubs, places of worship and gyms.

On 31 October, British Prime Minister Boris Johnson announced that the country would go into a second national lockdown as the number of active coronavirus cases rose by a million. The regions would once again go to the tiered system after the restrictions are eased post 2 December. The tier system introduced earlier at a local level though had failed to curb the spread of the deadly virus. 

Just like the first lockdown, all the leisure and entertainment outlets and establishments, pubs, restaurants and bars, will remain closed to avoid public gathering.

However, eateries and restaurants can operate their deliveries and takeaways. Except for offering support to the vulnerable or childcare, socialising outside the home is prohibited.

Also read: Second Lockdown in the UK: Which sectors could do well

The worst part of the second lockdown is that it has come at the wrong time. The festive season is round the corner, and most of the businesses look forward to this time of the year for sound earnings. During the second lockdown, all the non-essential retail, including clothing stores, home appliances, car dealers, entertainment zones would be closed. Notably, Covid-safe retail facilities which can help in online delivery to customers can remain open during the lockdown. Self pick-up services such as click-and-collect can also run, provided the retail spaces are Covid-secure.  

Also read: Second Lockdown: Mortgage Holidays Are Set To Be Extended For Next Six Months

Essential retail shops dealing in processed food items or supermarkets, hardware shops are allowed to operate, provided their stores are Covid secure, and they are not supposed to trade in non-essential items.

Although the lockdown rules are pretty much the same as before, there are a few things which have changed this time. Nurseries and educational institutes are allowed to operate. During the unprecedented crisis, educational institutions have already prepared themselves to conduct classes through online learning platforms. The schools are also prepared to implement ‘bio-bubbles’ in which youngsters can mix up with fellow colleagues.

We would take a look at some of the companies which are expected to do well during the second lockdown.

Tesco Plc (LON: TSCO)

During the first lockdown, the multi-retailer witnessed stockpiling and bulk orders for basic needs like food staples, processed food, personal care and household products. The UK-based retailers had to put a cap on items so that people could get access to these items. In addition, Tesco made the headlines for testing drone deliveries in October. The company has invested in technological advancement, and its drone deliveries experiment could prove to be a gamechanger in the industry.

FTSE 100 listed Tesco Plc expects the capital expenditure to fall in the range of £0.9-£1.2 billion during the fiscal year 2021. The retailing giant is likely to generate net cash proceeds of around £165 million from the sale of its Polish business. The company forecasts its profit earnings to grow year-on-year. 

During the first half of the fiscal, the company saw its online delivery capacity going up to 1.5 million slots per week from just 600,000 slots per week. 

During the first half of the year, the FTSE 100 listed retailer observed a major shift in the shopping habits as food sales jumped 9.2 per cent year-on-year and clothing sales were down by 17.2 per cent year-on-year. The company’s retail EBITDA was up by 4.4 per cent year-on-year and NPS (net promoter score) also improved to a certain extent.

The company also announced an interim dividend of 3.2 pence during the first half of FY2021. Tesco shares traded at GBX 214.10 on 5 November at GMT 12:18 PM+ 1.

Reckitt Benckiser Group Plc (LON: RB.)

During the initial lockdown, there was a case of stock-outs for hand sanitisers. The demand for cleanliness and hygiene products had risen dramatically during the first phase of the crisis. FTSE100-listed Reckitt Benckiser has a global presence that provides health and hygiene products.

During the fiscal year, the net revenue on a like-for-like basis is projected to grow from previous 'single-digit' to 'double-digits'. The e-commerce sales were up by 45 per cent year-on-year during the third quarter of 2020. 

The coronavirus pandemic proved to be a boon for the company as it gained a lot of market share by achieving good sales volumes across its disinfectant brands, such as Lysol and Sagrotan.

Moreover, the increased consumption for hygiene products shall boost the earnings of the company in the near future. Most importantly, lockdown and social-distancing measures have led to an increase in the consumption of cleaning and hygiene products. Reckitt Benckiser shares traded at GBX 7,146 on 5 November at GMT 12:37 PM+ 1.

The second lockdown would see people staying indoors and working remotely. Therefore, people will intend to buy things in bulk quantities in order to avoid unnecessary travelling to marketplaces. These would make the environment conducive for the essential businesses, which have done exceptionally well during the first lockdown and are expected to carry on their good run.